Dov Charney took another big loss this week.
After being ousted from American Apparel in 2014, the former CEO has endured a long-fought battle to regain control of the struggling fashion brand. His latest attempt involved placing a $300 million takeover bid on the company, which was backed by investors Hagan Capital Group and Silver Creek Capital Group. But it appears those efforts were for nothing.
According to the Los Angles Times, a U.S. Bankruptcy Court judge approved an alternative reorganization plan that would hand over American Apparel to its lenders, reducing the brand’s debt by over $200 million. The ruling will ultimately wipe out shareholders, including Charney, who owned about 40 percent of the company’s stock.
Following Monday’s decision, the L.A. Times caught up with Charney, who said he will not appeal the ruling as he does not have the financial means to do so. But he did pen a lengthy response to the judge's decision that was posted on Medium, as pointed out by Racked.
This outcome is one that I have been working tirelessly for nearly two years to avoid in an effort to protect value for the company’s various stakeholders. Now all stockholders will have their shares and value extinguished.
Many of the company’s loyal vendors will recover only cents on the dollar of what the company owes them. And the company’s workers, faced with current management’s inability to generate profits, face a highly uncertain future.
He ended the piece with a rather pessimistic outlook for the brand that he started nearly three decades ago. He does, however, seem hopeful for the next chapter in his career—hinting at the possibility of another fashion line.
The sad reality is that American Apparel, the largest garment manufacturer in the United States, will not survive at this pace and I don’t believe the current management has the talent to bring it back to health.
At the end of this saga, I, like the many former stockholders, will most likely be left with nothing. Despite that, what gives me great optimism are the things I possess that can’t be stolen by a predatory hedge fund — my ideas, values, drive, authenticity, integrity and my passion. To that end I ask that my supporters stay tuned.
You can read Charney’s full response here.